Still few women on boards

As the spring 2012 annual meeting season nears, shareholders will receive management information circulars and annual reports over the next few months.

Of special interest will be the extent to which companies have broadened the base of their directors away from the staple: a male living in Canada who is at least 60 years old and who has been a director for about eight years, to include a larger group of women directors.

Certainly the recent trends aren’t positive: In its 2011 Governance Insights, Davies Ward Phillips & Vineberg noted 88% of the TSX 60 issuers nominated at least one woman as a candidate for election in the 2011 proxy season while 68% put two or more women candidates forward. But 57% of issuers in the balance of the S&P/TSX composite and 65% of small-cap index issuers did not put any women forward. There are seven female chairs of the 360 companies included in the study.

The longer-term trends aren’t that great either. In 1976, Earle McLaughlin, the then president of the Royal Bank of Canada, was asked “Why were there no women on the board of the bank?” His reply: “There were no women on his board because its directors couldn’t find one who was qualified.” Shortly thereafter, the bank found one.

At its 2011 annual meeting the bank nominated three women as directors. The Royal is home to 14 board members.

Carol Hansell, the Davies partner who authored the paper, said the real surprise from the paper is that “no progress” is being made on the issue of women directors. “People continue to talk about the fact that it’s a pipeline issue, meaning women just have to make their way through the pipeline. But people have been saying that for all of my professional career,” said Hansell, who reckons that at a 0.50% a year, the current rate progress for women directors, equality will be achieved by 2100.

Hansell isn’t a supporter of quotas “but what are we supposed to do at this point. It’s not progressing on its own,” she said.

For Hansell, the issue boils down to the determination of the two main groups that help companies seek out directors, the search firms and the nominating committee of the board, to find suitable women candidates. “If you don’t seriously put women on to the short list, you will never get any women onto the board.”

And Hansell says there is no shortage of suitable women candidates.

“There are lots of women in very responsible positions who have led very significant organizations at a variety of levels who aren’t being invited onto boards. But somehow [the women] are not in the field of vision of the groups who are trying to find directors,” she said. “For some reason [the two groups] don’t see women as having qualifications that are comparable to the men. I don’t think that’s correct.”

Hansell, who has been a public company director, said: “It seems to me that we hold women to a higher standard. We are looking for women who are chief executives. But not all the men on boards are CEOs,” she added.

Indeed, some men have made a career out of being a director. The Davies study noted that TSX 60 directors “typically serve on up to four other public company boards.”

Last month the Institute of Corporate Directors weighed in on the matter.

After a series of town hall meetings and a survey of 550 of its members on the theme of diversity in the boardroom, it concluded that diversity is a good thing but don’t make it mandatory.

In an executive summary, this was said:

“The ICD urges all Canadian boards to consider its recommendations and commit themselves to working actively to foster greater board diversity by:

* Considering diversity as an important part of the criteria that are used to determine board composition. Diversity for these purposes should be broadly defined to include gender, ethnicity, age, business experience, functional expertise, personal skills, stakeholder perspectives and geographic background;

* Adopting formal diversity policies that outline the essential criteria and experiential attributes that fulfill the needs of the board;

* Directing search firms, where used, to include diverse candidates in searches whenever possible (and subject to satisfying the qualifications of the position);

* Encouraging search firms to include qualified candidates who are unknown to current board members;

* Facilitating diversity agendas that permeate all levels of an organization, starting at the top with the Board, CEO and senior management ranks; and

* Considering limits on the tenure of board members to encourage ongoing board renewal, being mindful of the need for a healthy degree of board continuity and experience.”

A note from Pamela Jeffery, WXN Founder

Change is always going to happen. The question is: how do you manage it right?

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The Women’s Executive Network promotes the advancement and recognition of women in management, executive, professional and board roles. WXN and Postmedia formed a business partnership to promote equality and diversity for businesses across Canada.